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Heartland BancCorp Earnings Increase 20.4% to $1.9 Million, or $1.22 per Diluted Share, in 3Q15, Declares Quarterly Cash Dividend of $0.3724 per Share

GAHANNA, Ohio, Oct. 20, 2015 (GLOBE NEWSWIRE) -- Heartland BancCorp ("the company," and "the bank") (OTCQB:HLAN), today reported earnings increased 20.4% to $1.9 million, or $1.22 per diluted share in the third quarter of 2015 compared to $1.6 million, or $1.02 per diluted share, in the third quarter a year ago. In the preceding quarter, earnings were $1.8 million, or $1.15 per diluted share. For the first nine months of the year, Heartland's earnings increased 20.2% to $5.3 million, or $3.36 per diluted share, compared to $4.4 million, or $2.82 per diluted share, in the first nine months of 2014.

The Company also announced its board of directors declared a regular quarterly cash dividend of $0.3724 per share. The dividend will be payable January 10, 2016, to shareholders of record as of December 25, 2015.

"With above average wage growth and below average unemployment, the greater Columbus market continues to be one of the healthiest economies, not only in the region, but in the country.* We have been strategically positioned to leverage that growth," said G. Scott McComb, Chairman, President and CEO.

Third Quarter Financial Highlights (at or for the period ended September 30, 2015)

  • Net income was $1.9 million, up from $1.8 million in the preceding quarter and $1.6 million in the third quarter a year ago.
  • Net interest margin remained strong at 3.96% compared to 4.08% in the preceding quarter and 4.04% in the third quarter a year ago.
  • Annualized return on average assets was 1.14%.
  • Annualized return on average equity was 12.47%.
  • Total deposits increased 12.0% to $608.0 million from a year ago.
  • Net loans increased 10.5% to $529.7 million from a year ago.
  • Non-performing assets decreased 29.8% to $4.1 million, or 0.59% of total assets, at September 30, 2015, compared to a year ago, and increased from $3.6 million in the preceding quarter.
  • Tangible book value per share increased 8.0% to $40.84 per share compared to $37.80 per share one year earlier.
  • Declared a quarterly cash dividend of $0.3724 per share, which represents a 3.0% yield based on the September 30, 2015 stock price. ($48.97)

*http://money.cnn.com/2015/08/10/news/economy/cities-fastest-wage-growth/

Balance Sheet Review

"Our strong loan growth during the quarter, particularly in the agricultural and commercial and industrial (C&I) portfolios, contributed to double digit year-over-year loan growth again this quarter," said McComb. "We have taken advantage of the thirst for local community banking, and continue to develop relationships with new clients as they seek what we deliver." Net loans increased 0.6% to $529.7 million at quarter end, compared to $526.4 million three months earlier and increased 10.5% compared to $479.3 million a year earlier.

Total deposits increased 2.8% to $608.0 million at September 30, 2015, compared to $591.3 million at June 30, 2015 and increased 12.0% compared to $543.0 million at September 30, 2014. Demand accounts represented 19.6%, savings, NOW and money market accounts represented 35.7%, and CDs comprised 44.6% of the total deposit portfolio, at September 30, 2015.

Total assets increased 2.4 % to $700.5 million at September 30, 2015, compared to $683.8 million three months earlier and increased 10.1 % compared to $636.0 million a year earlier. Shareholders' equity increased 3.2% to $64.2 million at September 30, 2015, compared to $62.2 million at June 30, 2015 and increased 8.7% compared to $59.1 million one year ago. At quarter end, Heartland's tangible book value increased 3.1% to $40.84 per share compared to $39.60 per share three months earlier and increased 8.0% from $37.80 per share one year earlier.

Operating Results

"Our net interest margin contracted during the quarter, reflecting the continued margin compression that the industry is experiencing," said McComb. Heartland's net interest margin was 3.96% in the third quarter of 2015, compared to 4.08% in the preceding quarter and 4.04% in the third quarter a year ago. In the first nine months of the year, Heartland's net interest margin was 4.03%, a three basis point improvement compared to the same period a year ago.

Total revenues (net interest income before the provision for loan losses, plus non-interest income) increased 9.5% to $7.3 million in the third quarter, compared to $6.6 million in the third quarter a year ago. Year-to-date, total revenues increased 11.0% to $21.1 million, compared to $19.04 million in the first nine months of 2014. Net interest income before the provision for loan loss increased 8.3% to $6.4 million in the third quarter of 2015, compared to $5.9 million in the third quarter a year ago. In the first nine months of 2015, net interest income before the provision for loan losses increased 12.8% to $18.9 million, compared to $16.7 million in the first nine months of 2014.

Heartland's noninterest income was $874,000 in the third quarter of 2015, compared to $732,000 in the second quarter and $734,000 a year ago. The increase in noninterest income reflects a $124,000 net gain on sale of loans, which is more than triple the gains booked the prior periods. Year-to-date, noninterest income was $2.28 million compared to $2.33 million in the same period a year ago. In 2014, Heartland had substantial gains from sales of securities and foreclosed assets.

In the third quarter of 2015, noninterest expenses were $4.3 million, which were unchanged compared to the preceding quarter, and up from $4.1 million a year ago. In the first nine months of the year, noninterest expenses were $13.0 million compared to $11.9 million in the first nine months of 2014. The year-over-year increase is primarily attributable to costs associated with the new branch in Pickerington, Ohio, as well as higher employee and incentive costs due to higher loan production.

Credit Quality

"Credit quality continues to improve compared to a year ago, and all of our foreclosed assets have been cleared as of the end of the quarter. Nonaccrual loans and past due loans still accruing, however, were up in the current quarter for a few relationships that have been slow in making their payments," said McComb.

Heartland's nonaccrual loans were $3.0 million at September 30, 2015, which was a slight increase compared to $2.6 million three months earlier, and a decrease of 42.4% from $5.2 million a year earlier. Loans past due 90 days and still accruing also increased to $1.1 million from $872,000 at the end of the second quarter and $157,000 a year ago. Other real estate owned (OREO) and other non-performing assets were zero compared to $127,000 at June 30, 2015, and $517,000 a year earlier.

Nonperforming assets (NPAs), consisting of nonperforming loans, OREO, and loans delinquent 90 days or more, were $4.1 million at September 30, 2015, compared to $3.6 million three months earlier, and decreased 29.8% when compared to $5.9 million a year ago.

Heartland's third quarter provision for loan losses was $160,000, down from $240,000 in the preceding quarter. This compares to $275,000 in the third quarter a year ago. Year-to-date, the provision for loan losses totaled $640,000 compared to $1.03 million in the first nine months of 2014. As of September 30, 2015, the allowance for loan losses represented 190.8% of nonaccrual loans compared to 214.2% three months earlier, and 103.3% one year earlier.

Net charge-offs were $8,000 in the third quarter compared to $13,000 in the preceding quarter, and $81,000 in the third quarter a year ago. The allowance for loan losses was $5.6 million, or 1.06% of total loans at September 30, 2015, compared to $5.5 million, or 1.03% of total loans at Jun 30, 2015, and $5.4 million, or 1.11% of total loans a year ago.

About Heartland BancCorp

Heartland BancCorp is a registered Ohio bank holding company and the parent of Heartland Bank, which operates twelve full-service banking offices. Heartland Bank, founded in 1911, provides full service commercial, small business, and consumer banking services; alternative investment services; insurance services; and other financial products and services. Heartland Bank is a member of the Federal Reserve, a member of the FDIC and an Equal Housing Lender. Heartland BancCorp is currently quoted on the OTC Markets (OTCQB) under the symbol HLAN. Learn more about Heartland Bank at HeartlandBank.com.

In May 2015, Heartland was ranked #77 on the American Banker magazine's list of Top 200 Publicly Traded Community Banks and Thrifts based on three-year average return on equity ("ROE") as of 12/31/14.

Safe Harbor Statement

This release contains forward-looking statements that reflect management's current views of future events and operations. These forward-looking statements are based on information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations.

Heartland BancCorp
Consolidated Balance Sheets
Assets Sept. 30, 2015 June 30, 2015 Sept. 30, 2014
Cash and due from banks $ 29,736,396 $ 18,276,394 $ 25,105,558
Federal funds sold -- -- --
Cash and cash equivalents 29,736,396 18,276,394 25,105,558
Available-for-sale securities 104,061,671 102,750,431 104,317,349
Held-to-maturity securities, fair value $6,845,100 and $7,097,981 at September 30, 2015 and 2014, respectively and $6,912,734 at June 30, 2015 6,498,787 6,512,404 6,627,470
Loans, net of allowance for loan losses of $5,649,773 and $5,363,148 at September 30, 2015 and 2014, respectively and $5,498,142 at June 30, 2015 529,733,539 526,378,261 479,316,638
Premises and equipment 13,458,703 13,052,320 12,252,675
Nonmarketable equity securities 2,658,239 2,658,239 1,941,839
Foreclosed assets held for sale -- 127,457 516,911
Interest receivable 2,374,220 1,835,510 2,185,004
Goodwill 417,353 417,353 417,353
Deferred income taxes 1,881,258 1,881,258 1,597,220
Life insurance assets 9,337,159 9,270,862 1,140,898
Other 322,333 686,528 607,778
Total assets $ 700,479,658 $ 683,847,017 $ 636,026,693
Liabilities and Shareholders' Equity
Liabilities
Deposits
Demand $ 119,445,210 $ 110,780,365 $ 103,352,665
Saving, NOW and money market 217,336,061 214,830,174 204,394,936
Time 271,254,619 265,725,425 235,257,990
Total deposits 608,035,890 591,335,964 543,005,591
Short-term borrowings 23,620,874 26,121,461 28,740,469
Interest payable and other liabilities 4,617,893 4,184,678 5,229,770
Total liabilities 636,274,657 621,642,103 576,975,830
Shareholders' Equity
Common stock, without par value; authorized 5,000,000 shares; issued 2015 -- 1,561,781 shares 2014 -- 1,552,922 shares and June 2015 - 1,560,121 shares 23,725,023 23,646,662 23,500,371
Retained earnings 39,765,320 38,403,912 35,062,394
Accumulated other comprehensive income (expense) 714,658 154,340 551,368
Treasury stock at Cost, Common; 2014- 1,665 shares -- -- (63,270)
Total shareholders' equity 64,205,001 62,204,914 59,050,863
Total liabilities and shareholders' equity $ 700,479,658 $ 683,847,017 $ 636,026,693
Book value per share $ 41.11 $ 39.87 $ 38.07
Heartland BancCorp
Consolidated Statements of Income
Three Months Ended Nine Months Ended
Interest Income Sept. 30, 2015 June 30, 2015 Sept. 30, 2014 Sept. 30, 2015 Sept. 30, 2014
Loans $ 6,497,915 $ 6,492,460 $ 5,919,484 $ 19,130,541 $ 16,605,072
Securities
Taxable 335,461 313,128 282,906 952,108 931,880
Tax-exempt 383,968 386,843 402,987 1,156,269 1,239,181
Other 15,443 11,301 8,056 35,037 30,284
Total interest income 7,232,787 7,203,732 6,613,433 21,273,955 18,806,417
Interest Expense
Deposits 846,062 805,249 715,202 2,404,828 2,072,920
Borrowings 3,291 3,050 4,513 10,018 12,631
Total interest expense 849,353 808,299 719,715 2,414,846 2,085,551
Net Interest Income 6,383,434 6,395,433 5,893,718 18,859,109 16,720,866
Provision for Loan Losses 160,000 240,000 275,000 640,000 1,030,000
Net Interest Income After Provision for Loan Losses 6,223,434 6,155,433 5,618,718 18,219,109 15,690,866
Noninterest income
Service charges 500,789 479,553 505,932 1,447,861 1,505,144
Net Gains and commissions on loan sales 123,793 43,802 36,098 207,121 89,004
Net realized gains on available-for-sale securities -- 8,500 -- 16,934 136,701
Net realized gain/(loss) on sales of foreclosed assets 5,250 -- 51,273 5,308 154,073
Other 244,580 199,914 140,263 607,690 441,031
Total noninterest income 874,412 731,769 733,566 2,284,914 2,325,953
Noninterest Expense
Salaries and employee benefits 2,501,325 2,542,268 2,346,693 7,531,362 6,717,988
Net occupancy and equipment expense 478,053 466,576 422,382 1,386,353 1,291,626
Data processing fees 270,360 274,407 184,541 816,850 699,281
Professional fees 140,972 122,229 203,598 433,700 586,117
Marketing expense 135,000 135,000 131,250 411,000 398,750
Printing and office supplies 33,805 44,183 38,063 127,091 122,721
State franchise taxes 105,982 105,981 90,097 317,945 283,127
FDIC Insurance premiums 111,000 96,000 91,836 318,000 250,253
Other 564,992 534,157 595,943 1,667,520 1,573,688
Total noninterest expense 4,341,489 4,320,801 4,104,403 13,009,821 11,923,551
Income before Income Tax 2,756,357 2,566,401 2,247,881 7,494,202 6,093,268
Provision for Income Taxes 813,343 740,559 634,529 2,175,321 1,668,139
Net Income $ 1,943,014 $ 1,825,842 $ 1,613,352 $ 5,318,881 $ 4,425,129
Basic Earnings Per Share $ 1.25 $ 1.17 $ 1.04 $ 3.42 $ 2.85
Diluted Earnings Per Share $ 1.22 $ 1.15 $ 1.02 $ 3.36 $ 2.82
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands except per share amounts)(Unaudited) Three Months Ended Nine Months Ended
Sept. 30, 2015 June 30, 2015 Sept. 30, 2014 Sept. 30, 2015 Sept. 30, 2014
Performance Ratios:
Return on average assets 1.14% 1.10% 1.05% 1.01% 0.97%
Return on average equity 12.47% 11.93% 11.21% 10.96% 10.40%
Net interest margin 3.96% 4.13% 4.04% 4.03% 4.00%
Efficiency ratio 59.82% 60.70% 61.93% 61.58% 63.05%
Asset Quality Ratios and Data: As of or for the Three Months Ended
Sept. 30, 2015 June 30, 2015 Sept. 30, 2014
Non accrual loans $ 2,991 $ 2,567 $ 5,192
Loans past due 90 days and still accruing 1,126 872 157
Non-performing investment securities -- -- --
OREO and other non-performing assets -- 127 517
Total non-performing assets $ 4,117 $ 3,566 $ 5,866
Non-performing assets to total assets 0.59% 0.52% 0.92%
Net charge-offs quarter ending $ 8 $ 13 $ 81
Allowance for loan loss $ 5,650 $ 5,498 $ 5,363
Non accrual loans $ 2,962 $ 2,567 $ 5,192
Allowance for loan loss to non accrual loans 190.75% 214.18% 103.29%
Allowance for loan losses to loans outstanding 1.06% 1.03% 1.11%
Book Values:
Total shareholders' equity $ 64,205 $ 62,205 $ 59,051
Less, goodwill 417 417 417
Shareholders' equity less goodwill $ 63,788 $ 61,788 $ 58,634
Common shares outstanding 1,561,781 1,560,121 1,552,922
Less treasury shares -- -- 1,665
Common shares as adjusted 1,561,781 1,560,121 1,551,257
Book value per common share $ 41.11 $ 39.87 $ 38.07
Tangible book value per common share $ 40.84 $ 39.60 $ 37.80

CONTACT: G. Scott McComb, Chairman, President & CEO Heartland BancCorp 614-337-4600

Source:Heartland BancCorp